tv Nightly Business Report PBS October 12, 2011 7:00pm-7:30pm EDT
>> susie: from south korea to panama and colombia-- congress gears up to pass three huge trade deals, and they're all about boosting u.s. jobs. >> and this jobs bill, mr. speaker, does not require a tax increase. this jobs bill does not require us to go into debt. and this jobs bill has bipartisian support. >> tom: from boosting jobs through trade to losing jobs on wall street, we look at what job cuts in the world of finance could mean for the u.s. economy. it's "nightly business report" for wednesday, october 12. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
this program is made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt >> susie: good evening everyone. high hopes on wall street today. u.s. investors bought up stocks after european officials rolled out what's seen as the most credible plan so far to prop up european banks. tom? >> tom: susie, the plan was rolled out today by the president of the european commission, jose manuel barrosa. he called on european leaders to act quickly and agree at a meeting in two weeks. here's what he's calling for. european banks would be required to temporarily increase their
capital reserves. that extra cash should come from the private sector first, then from governments. and as a last resort, banks would be allowed to tap into the eurozone bailout fund. that plan was one reason the major stock averages moved higher. the other? word that the federal reserve might be open to another round of bond purchases. that's what policymakers discussed at their september meeting according to minutes released today. here's how things looked by the closing bell. the dow rose 102 points, but the blue chips had been up over 200 points earlier in the session. the nasdaq added 21 and the s&p tacked on about 12.
>> tom: one bright spot has been found overseas, american exports growing to record levels. u.s. lawmakers in the house and senate are on track to approve trade deals tonight with panama, columbia and south korea. the trade deals have dominated debate today in both the house and the senate. the house passed all three bills just minutes ago and the senate is expected to vote later tonight. washington bureau chief darren gersh reports on the debate. >> reporter: from cars to coffee to high-end electronics, you may have bought their products in the u.s. now congress hopes more american products will be available duty- free in panama, colombia and south korea. >> with a 9.1% unemployment, this is a no-brainer. export more, make our products more competitive by lowering tariffs and create jobs in america. what could be more clear? but critics say government experts have a long history of overestimating job gains from trade and underestimating the impact of cheaper imports on the u.s. trade deficit. >> this trade agreement, which was negotiated by the previous administration, contains too many flawed trade policies of
the past... rather than laying out a new a progressive measure for the future. >> reporter: the trade deals were signed four years ago under the bush administration. they were delayed over concerns about human rights in colombia and market access in korea. to overcome these hurdles, the obama administration insisted on tougher protections for the environment and for u.s. automakers. supporters say the end result is a small win for the economy. >> i don't think it will make a noticeable dent in the unemployment rate, but it will create a better class of jobs. higher income for americans, without increasing federal spending by a dime. i think that's pretty good for the u.s. economy in the current climate. >> reporter: while congress has taken one step forward on free trade agreements, it is ramping up pressure on another trade front as pressure builds to label china a currency manipulator. >> an eight-ton gorilla that is lying on the floor of this house
that is a million jobs when you want to talk about 6,000 jobs. >> reporter: to reassure democrats worried about job loss, the obama administration tied the vote on the free trade deals to extension of the trade adjustment assistance program. t.a.a. provides re-training to workers who lose their jobs to foreign competition. a vote to extend the t.a.a. program is expected late tonight. darren gersh, "nightly business report," washington. >> susie: still ahead, the threat of government spending cuts to defense doesn't worry hilary kramer. she's coming up with a stock pick in "street critique." >> tom: chrysler has finally hammered out a deal with the united auto-workers union. it's the last of detroit's big automakers to do so. the four-year pact calls for the addition of 2,100 jobs in the u.s. over the next four years. chrysler also will invest $4.5 billion in its plants and lineup of cars. union workers will get a $3,500 signing bonus and $1,000 in annual bonuses. however, most yearly raises were replaced by profit sharing. >> susie: also from detroit today, general motors is
supercharging its lineup of fuel-efficient vehicles with an all-electric subcompact. the chevy spark will go on sale in 2013. g.m. won't say yet how much the the tiny plug-in will cost or how far it will go on a single charge. it will first go on sale in california and washington to help meet the zero-emission requirements in those states. g.m. chief marketing officer joel ewanick says the spark will be rolled out in other states as the infrastructure for electric vehicles improves. >> what we find is there is a lot of frustration for people who have electric cars in that they can't find the infrastructure to plug in for their daily needs. that's why we're going to do it when it makes sense to roll these cars out and invest in this strategy when it makes sense. >> susie: n.b.r. midwest bureau chief diane eastabrook joins us from the c.m.e. group in chicago.
hi, diane. i erd that you went and saw he car today. what did you think? >> i actually didn't see it up close, but i did see it on a feed that came down. >> susie: one thing i think is interesting is g. m. has the chevy volt, those sales have been on the slow side. so why is g. m. moving ahead with another electric vehicle? >> well, susie, g. m. is still rolling out the volt nationwide. but as you said sales do seem to be behind where the company thought they would be. part of it has to do with infrastructure, we still don't have a lot of public charging stations out there. part of it is price, this is a $40,000 vehicle in a sour economy. and the other part could be gasoline prices, they've been sliping in recent months, so it's sort of hard to make an argument to buy a $40,000 electric car when gas is cheap. but g. m. and the rest of the auto industry are fairly confident that once they can clear some of these hurdles, get infrastructure in place, the economy gets back on track, that these vehicles will gain traction with consumers. >> susie: and what about
price? that's a very interesting point. $40,000 isn't cheap. how much longer, how many years away are we from seeing electric cars that are a little more affordable? >> well, part of the reason that these cars are so expensive, a big part of the reason they're expensive is the cost of batteries. right now these batteries cost between 800 and $1,000 per kilowatt hour. expert say if you can get that police down to about $300, they will be a lot more affordable, the cars will be a lot cheaper. that could probably take another few years. >> susie: now, this new chevy spark is going to come up head to head with nissan's leaf all electric. but the leaf has been doing pretty well recently. what does it have going for it? >> well, the leaf, one of the things that leaf has going for it is price, it's priced at about $32,000, so about $8,000 less than the volt. it also gets better range, it gets between 80 miles and 100 miles, where the volt only
gets 40 per charge, but the volt keep in mine has the backup gasoline engine. the other thing too that you have to keep in mine, the first people that buy these are the so-called change junkies, they are buying this to make a social statement. and you can make more of a social statement by driving a vehicle that is all electric, an all electric plug-in versus one that also has a gasoline backup engine. >> susie: tell us about volkswagen, let's switch gears. i understand you'll be talking to the head of v. w. america, what will you be talking about? >> we're going to take a look at the new beetle that is rolling into showrooms now. you may recall that the previous beetle was very popular with women. it was considered to be a chick car. they've actually changed the design, and they are trying to attract men, so that they are hoping with this new design it's more manly looking. they can attract men. but still keep the women as well. >> susie: well, we're going to be very interested to see that interview and that story.
thanks so much, diane. >> you're welcome. >> susie: we've been talking with midwest bureau chief diane eastabrook. >> tom: the capital of the keystone state has gone bust. harrisburg, pennsylvania filed for bankruptcy today. the financially-distressed city is seeking a rare chapter nine protection after failing to pay the debt on a trash incinerator. the principal amount the city has guaranteed is about $242 million, with $65 million past due. the filing came as the state was on the brink of taking over harrisburg's finances. complicating matters, the city's mayor says the bankruptcy filing is illegal because the panel did not follow proper procedures. dan miller is harrisburg's city controller. he supports the bankruptcy and says it will give the city more leverage in dealing with its creditors. >> the next real step is to sit down and negotiate with both the county, who's guaranteed a large amount of these bonds and the bond insurer, a.g.m., and those are the two real entities that
>> susie: even people on wall street are losing their jobs, it's estimated that 32,000 jobs have been lost here since the height of the financial crisis. the reason, a slowing global economy and increased regulation. erika miller takes a closer look at whether the job losses reflect a typical business skik el downturn or something more severe. >> reporter: he does not work on wall street, he works for it recruiting top talent. given the turmoil in the stock market this year he's not surprised by the coming layoffs. >> i believe that there's been a bubble. and every now and then you got to pop the bubble. and it makes sense, i'm sorry for a lot of people, there are good people that are losing their jobs, but there's been a bubble. >> reporter: employment on wall street has always been closely tied to the stock market. but economist kerry lahey beliefs there is a bigger transportation formation under way due to greater industry regulation. >> you have an industry that is being chopped up and reregulated after effectively
30 years of little regulation that generally means the industry is going to be getting smaller. >> reporter: what happens to wall street affects main street as well. especially in new york city. the state estimates that every lost job in the financial sector leads to at least two more lost positions in other industries. a smaller less profitable financial sector will also mean plummeting tax revenues, for cities and states laid off employees live in. many of the people who lose their jobs will be highly educated. increasing their odds of finding positions in other industries. the catch is the pay. >> the typical person who is laid off, when he finds a job, finds a job at basically a one-third pay cut. so it's quite significant. >> reporter: and this lower compensation is a deal breaker. recruiters say the other choice is to move. >> i've seen a number of very senior people leave new york for places like ohio and denver because they got good jobs. and i've also seen something
rather interesting. against all odds, and all thoughts, they're actually a lot happier where they are now. >> reporter: he should know. dolfino used to work on wall street, but left for a job with a better quality of life. >> tom: we saw some higher stock prices today. >> tom: the major stock indices closed higher on growing optimism from europe. the dow found buyers from the opening bell and climbed nicely through the session. there was a small pull-back into the close, but at its high today, the dow turned positive for the year.
now down just a fraction. disney shares led the dow gainers with a 3.5% rally. it continues to bounce off the upper $20s per share, which was its low over the past year-- hit last week. cleary the market continues to find some value here. disney's rally helped lift the consumer discretionary sector today, up more than 1%. industrials was the second best sector. but financials again led the market, up almost 3%. j.p. morgan was among the big banking stocks moving up, gaining almost 3%. a nice rally. volume was a little heavier. the stock is up 20% from its most recent low hit last week. third quarter results come tomorrow before the opening bell. could set the tone early
tomorrow. citigroup reports earnings next monday. shares jumped almost 5% today to their highest price since labor day. volume was also heavier in citi today. life insurance stocks provided a boost. lincoln financial was up 6%. both genworth and aflac gained more than 4%. yesterday, a regulatory agency gave its preliminary okay for rules on how to decide what non- bank financial institutions are considered too big to fail. the analyst at k.b.w. thinks these insurers won't be subject to new rules. beverage and snack food giant pepsi turned in better-than- expected quarterly results, beating estimates by one penny per share. revenues also were stronger than anticipated. the company is planning to raise prices on some gatorade drinks and frito-lay snacks. blame higher commodity prices. pepsi stock saw a higher price today, up 3%, but still in the range its been in since the july sell-off. wal-mart sells plenty of pepsi, gatorade and frito lay. today, the retailer reported positive same-store sales in the
u.s. over the past three months. that's the first time that's happened in more than two years. positive, bullish sign. walmart made that forecast at its annual analyst meeting. shares saw strong volume, climbing a fraction, but enough to put the stock at its highest price since memorial day. its sam's club stores report the best membership performance in years and at highest membership rates. other gainers? fashion brand liz claiborne rocketed higher more than 34%. it will sell its namesake brand and cut its debt. t.e. connectivity is the former tyco electronics. it jumped 7% as the stock will replace cephalon in the s&p 500. and auto battery maker johnson controls added 5% even though its financial forecast was disappointing. still, it expects double digit growth. and that's tonight's "market focus." >> susie: one other stock in focus today?
research in motion. shares of the blackberry maker fell 2% as service outages spread to the u.s. blackberry users here began reporting service problems today. it follows two days of sporadic blackouts across europe, the middle east and africa. research in motion blamed the latest outages on a backlog of emails to europe. the company says engineers are working around the clock to fix the problem. >> tom: with congress about to start another debate over government spending, defense contractors are bracing for cutbacks. tonight's "street critique" guest isn't running scared, though. she's hilary kramer, editor of gamechangerstocks.com. you like goi, geoi, a defense and commercial contractor providing satellite images, the share price clearly has been trending lower though over the last 12 months. what's to like? >> this is about satellite imaging which is the future of how the united states and other countries are trying to secure their borders, file wars and keep themselves safe.
geo eye has many applications beyond defense and that's the beauty of this satellite operator. energy, agriculture, mining, maritime, rescue. so geo eye is a multi faceted company, and another satellite is going up there soon, another bird will fly in another year, and then lastly geo eye, there's been rumors in trade publications that they are ready to sell themselves. that again is just rumors, but it makes sense that a big defense contractor would want to be in this niche area that's growing. >> tom: this is not a new pick of yours, you first mentioned it on n. b. r. on december 22, 2010. it was at $43 per share late in december, now it's about $10 cheaper. what do you expect out of it, have you hold on? >> i've held on all the way down to 26, which, it's gone
up in a week, it's amazing. but the potential in acquisition, a premium could certainly mb the area of 46, $47. >> tom: let's get to our viewer comments. christine writes: do you reinvest your earned dividends or take the cash and invest it in other picks? what do you do with those dividends the companies throw off? >> great question. much easier reininvestment for performance, for my taxes, as well as it depends if it's a one percent dividend or a 5%. but i am always do the reininvestments. >> tom: a dividend reininvestment plan, fair enough. dave writes, to recommend ruth's cris with high unemployment is insane, yes the bankers on wall street will support ruth's chris, but the overall economic climate won't. this is what you mentioned just a week ago, ruth's
hospitality service which means owns the steak house ruth's chris and since then the share price has bounced up nicely, was about 4.25 a week ago, tonight over 4.75. what do you say to dave's critique? >> ruth's chris in reality is a growing company. it is a, there's a loyal consumer customer base and it's not wall streeters, it's an american company that came out of louisiana. i understand his feelings, i've seen that before. but the reality is revenue growth and bottom line growth. >> tom: all right. you own everything we mentioned tonight? >> yes, i sure do. >> tom: you can send us your e-mails and critiques of course are welcome, it is street critique after all. we'll feature more of your questions and critiques neck week. our guest this evening, hilary kramer, gamechangerstocks.com.
>> susie: here's what's on the calendar for tomorrow: quarterly results from google and j.p. morgan chase. and the international trade balance tells us if the u.s. imported or exported more goods in august. also, galleon group founder raj rajaratnam is scheduled to be sentenced for securities fraud and conspiracy. the hedge fund billionaire faces up to 24 years in prison. the financial fallout from last year's oil disaster in the gulf could be far from over. the "wall street journal" reports contractors for b.p. could be fined by the u.s. government for their role in the deepwater horizon spill. they're accused of vit labeling off shore drilling -- violating off shore drilling rules. >> tom: there were fewer listings in the help wanted ads as the summer wore on. the labor department says employers advertised just 3.1 million positions in august. that's down slightly from july. with almost 14 million americans out of work, that means four or more people were competing for each of those job listings in
tonight's money file wants to change that. here's the author of "i will teach you to be rich." >> a couple years ago, i was on book tour in portland, and i met a young woman who told me she'd taken my money advice. "ramit, i started planning ahead for my wedding! i already set up my automatic savings account!" "that's great!" i told her. "can i get you on video? my readers would love to hear your story." suddenly, she got very uncomfortable. when i asked her why, she finally said this. "it would be weird. you see, i'm not engaged yet." now, she may be "weird," but at least she's saving for an expense she will almost certainly have. most of us do not. these numbers are staggering-- and predictable. we repeat this exact delusion every day, ignoring expenses like holidays and emergency car repairs that will almost certainly happen, sooner or later. why don't we plan for these?
we can, using the power of psychology. it turns out that putting money aside in a generic savings account isn't very effective. for example, how many of us have said things like, "i should really put some of this into savings?" somehow, these accounts never seem to grow. there is another way. when we set aside money for specific purposes, our savings can grow very quickly. compare these two accounts. this is a generic savings account. now, here's an example of the financial system i use. notice that in my savings account, i have sub-savings accounts for very specific goals. which one will you raid for that last-minute vacation? which one are you likely to keep contributing to? we know we should be planning ahead, yet few of us do. so when we use the power of psychology to automatically save for predictable expenses, the results can be very powerful. i'm ramit sethi. >> tom: that's "nightly business report" for wednesday, october 12. i'm tom hudson. good night everyone, and good night to you too, susie. >> susie: good night tom. i'm susie gharib. good night everyone. we hope to see all of you again tomorrow night.